Brazil Crime Groups Expanding Oil Theft Operations

Petrobas reported 73 attempted oil thefts in 2016, up from 14 in 2015.

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Prosecutors say a dismantled criminal network operating near Rio de Janeiro stole 14 million liters (3.5 million gallons) of fuel in 2016, suggesting that Brazilian crime groups are diversifying their illicit revenue streams by increasing their involvement in oil theft.

After investigating a wave of killings in the northern suburbs of Rio de Janeiro, police followed a tip near the Duque de Caxias oil refinery that lead them to discover a system of tubes buried underground that was being used to steal fuel from the state-run oil company, Petroleo Brasileiro S.A. (Petrobras), Reuters reported on April 4.

The total value of the oil stolen by the crime group last year was estimated to be equivalent to about $11 million.

Police officials said the gang was stealing oil from Petrobas pipelines in Rio de Janeiro, then loading the fuel onto tanker trucks to transport back to secret refineries before selling the fuel on the black market to “illegal service stations” or “small-scale vendors in rural towns or city slums,” the news service wrote.

Police suspect corruption is aiding the theft.

“They knew what type of fuel was inside each pipe and what was the ideal point to place a tap without the change of pressure in the tube raising the attention of the company’s security system,” Rio police chief Giniton Lages told Reuters.

Additionally, police suspect the gang’s operations in Rio were lead by Caxias Denilson Silva Pessanha, “a former city councillor in Duque de Caxias and the owner of illegal gasoline stations.”

Thirteen people, including two military police officers, were arrested in connection to the Duque de Caxias refinery oil theft, and 26 others have warrants out for their arrest.

According to Reuters, authorities discovered that operations such as this one were occurring all along Brazil’s “oil heartland,” in the area of southern Brazil between Rio de Janeiro and São Paulo. The news service wrote that the scheme “is part of a larger crime wave in Brazil, and especially Rio, amid the country’s worst recession on record.”

InSight Crime Analysis

The expansion of Brazilian crime groups into oil theft has been a relatively recent phenomenon. According information Petrobras provided to Reuters, the number of actual or attempted thefts from the company’s pipelines rose from just one in 2014 to 14 in 2015, before more than quintupling to 73 in 2016.

In addition, the rise in oil theft appears to be contributing to a violent conflict over control of that criminal economy, something that has also occurred in other parts of Latin America. A spate of violence in the run-up to last year’s municipal elections in Rio was blamed in part on criminal disputes related to oil theft in the area.

In Mexico, oil theft has also increased in recent years as criminal groups seek to expand their portfolios. In 2016, Mexico’s state oil company Petróleos Mexicanos (Pemex) lost more than 2.2 billion liters (about 600 million gallons) of fuel worth an estimated $1.5 billion.

As is the case in Brazil, corrupt state oil workers have also helped criminal organizations steal oil in Mexico. Oil pipelines are very precisely engineered, and it is unlikely that criminal organizations posses the knowledge needed to quickly and accurately steal oil without considerable help from the inside.

A recent report estimated that crude oil theft could be worth between $5.2 and $11.9 billion annually. However, that estimate does not include data from Brazil, which one of the world’s biggest oil producers. It is likely that, as in Mexico, crime groups in Brazil are attracted to fuel theft due to the relatively low risk of detection combined with the profitability of the activity.

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